FHA has become the loan of choice for not only First Time Buyers, but any home buyer who has less than 10% for down payment. FHA only requires 3% (3.5% as of 1/1/2009) down, although that will change on January 1, 2009 to 3.5%, still a small amount compared to a Conventional loan.
Also, FHA is flexible on the source of the down payment. It can , or course from the checking or savings account of the buyer. It can also come from a 401K, however on a Fannie Mae or Freddie Mac loan, if the a loan from a 401K is used for the down payment, that new 401K loan payment is calculated into the debt to income ratios. On a FHA loan, the 401K payment is not included in the calculcation. Also, the entire down payment can be a gift from a relative on an FHA loan.
For more information on FHA loans and some of the other advantages, click here.
The flexibility in underwriting on an FHA loan as compared to other mortgage products currently available is a big advantage to any buyer looking to purchase a home in Orange County, CA. Especially with the high FHA limits Orange County will have in 2009, which will be $625,500 (adjusted to $729,750 currently). The high limits will work well in cities like Irvine, Newport Beach, Tustin, Santa Ana, Lake Forest, Aliso Viejo, Orange, etc. Now is a great time to review your options and get prequalified for a home.
Good Post, especially the part about the high loan limits... What could be better to entice loan officers to begin using FHA loan financing. Here in Fairfield County, Connecticut our high limit is over 700K.
Orange County's old FHA limit was $362,790 until the temporary limits pushed it to $729,750 in March of this year. Up until that happened, there were very few loan officers who even knew how to do an FHA loan. Suddenly lenders were scrambling to update their HUD approvals and loan officers were updating their FHA training. FHA is a great program and does have a lot of advantages over a typical Conventional loan, especially if the borrower is coming in with less than 10% down. More than 50% of my business is now FHA, which reminds me of how it used to be prior to 2002.